Forex trading has become increasingly popular among traders over the years. However, US citizens have been restricted from opening accounts with some Forex brokers, including FXCM. In this article, we will explore why US citizens can no longer open accounts with FXCM.
FXCM (Forex Capital Markets) is a well-known Forex broker that provides traders with access to the global currency markets. It was founded in 1999 and has since grown to become one of the leading Forex brokers in the world. However, in 2017, FXCM announced that it would no longer be accepting clients from the United States.
The reason for this decision is due to a settlement that was reached with the US Commodity Futures Trading Commission (CFTC) in February 2017. The CFTC is an independent agency of the US government that regulates the futures and options markets. The settlement was related to FXCM’s handling of its business in the US market.
In the settlement, FXCM admitted that it had failed to disclose a conflict of interest to its clients. The conflict of interest was related to its relationship with a market maker that was providing liquidity to FXCM’s retail clients. FXCM had an ownership interest in the market maker, which created a potential conflict of interest for the broker.
The CFTC found that FXCM had failed to disclose this conflict of interest to its clients and had also failed to adequately supervise its employees who were responsible for handling its US business. As a result, FXCM was fined $7 million and was required to withdraw from the US market.
In addition to the CFTC settlement, FXCM also faced regulatory action from the National Futures Association (NFA). The NFA is a self-regulatory organization that oversees the futures industry in the United States. It found that FXCM had engaged in fraudulent activities and had misled its clients about its relationship with the market maker. The NFA ordered FXCM to pay a $2 million fine and to withdraw from the US market.
The combination of these regulatory actions led FXCM to decide to withdraw from the US market altogether. The company decided that it was no longer financially viable to continue operating in the US market due to the fines and legal costs associated with the regulatory actions.
As a result, US citizens are no longer able to open accounts with FXCM. The broker has redirected its focus to other markets, including Europe and Asia, where it continues to offer its services to clients.
In conclusion, the reason why US citizens can no longer open accounts with FXCM is due to regulatory action taken by the CFTC and the NFA. FXCM admitted to failing to disclose a conflict of interest to its clients and was fined $7 million by the CFTC. The NFA also found that FXCM had engaged in fraudulent activities and ordered it to pay a $2 million fine. As a result, FXCM withdrew from the US market and redirected its focus to other markets.
